Over the holiday season, the Biden administration withdrew two pending regulations to unilaterally cancel hundreds of billions of dollars’ worth of student loans. Officials evidently judged that the administration would not have time to finalize and implement the new regulations before the Trump administration takes over. For the time being, loan cancellation by executive action is dead. But a simple legislative change can ensure these loan bailouts are never attempted again.
Specifically, Congress could block the Education Department from issuing new regulations or executive actions related to the student loan program that increase costs to taxpayers. Had it been in effect during the last four years, such a law would have killed all of President Biden’s attempts at loan cancellation in the cradle.
During the last Congress, Representative Glenn Grothman (R-WI) introduced a simple bill to do exactly that. The four-page Protecting Taxpayers From Student Loan Bailouts Act would have barred the Secretary of Education from issuing “economically significant” regulations or executive actions (those with a $100 million or greater annual impact on the economy) that increase the costs of the federal student loan program. Minor regulations, or regulations which don’t increase the costs of student loans, would still be allowed.
Even though President-elect Trump is weeks from inauguration, and is unlikely to cancel student loans on a large scale, Congress might still consider taking action to block future administrations from forgiving debts. After all, the next Democratic president may decide to finish what President Biden started.
He or she might also try to learn from Biden’s legal defeats and pursue a loan cancellation strategy that’s less vulnerable to the courts. Last year, the Education Department very nearly cancelled debts in secret before anyone could mount a legal challenge (an eleventh-hour lawsuit based on nonpublic evidence foiled the plan). Congress might wish to preempt such schemes in the future by proscribing them now.
A blanket prohibition on future loan cancellation is also in Republicans’ short-term interest. Congressional leadership wants to pass one or two budget reconciliation bills this year to extend the 2017 tax cuts, increase funding for immigration enforcement, and pursue other priorities. Lawmakers will need to find budget offsets to pay for all this.
Most of the savings from blocking loan cancellation are uncertain. After all, we don’t know what a future administration might try to do on loan cancellation. But the Congressional Budget Office (CBO) does estimate some savings from a broad prohibition on future loan forgiveness, on the basis that some future administration will probably try to cancel loans again. As CBO wrote in May:
CBO’s baseline includes costs that reflect the possibility of future administrative actions that would increase the cost to the government of federal student loans. Therefore, CBO estimates that enacting [Rep. Grothman’s bill] would decrease direct spending for student loans by $30.0 billion over the 2024-2033 period.
Granted, CBO issued those figures several months ago, and the estimated savings might look different today. Still, lawmakers could probably book several billion dollars in savings on paper by including Representative Grothman’s plan to block future loan cancellation. That would only pay for a small percentage of Republican legislative priorities, but every little bit helps.
The Biden administration may be finished, but it’s wrong to assume that its agenda on student loan cancellation is dead forever. Congress can Democrat-proof the student loan program forever with one simple legislative change, which will also modestly help Republican leaders achieve their budget reconciliation goals. In today’s politics, that’s as close to a layup as you can get.